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Friday, August 7, 2009

State Socialism and Anarchism: How Far They Agree and Wherein They Differ Regarding Health-Care Reform

The current US debate about health-care funding can be understood as concerned with meeting the challenge of doing three things at once: (1) ensuring that everyone can afford to buy ample medical services and (2) lowering the price of care while (3) not interfering with our choices.

An Unnecessary Tension among Health Care Goals—Created by the State

If you assume that most or all of the features of our current health care system should be treated as given, the trilemma really does seem irresolvable. Suppose everyone can afford ample medical care. We know what doctors charge. We know what hospitals charge. We know what drug manufacturers charge. We know what medical device manufacturers charge. And we know what insurers charge to, we’re told, make it all possible. And we know the charges are anything but insubstantial. So, given they way things work right now, if everyone can afford ample medical care, then everyone must be able to spend a lot of money.

If the current pricing of medical care really reflects conditions in the current market, and there’s no reason to think it doesn’t, then there’s no way to lower the cost of care without, realistically, making fewer services, fewer drugs, fewer devices available, as long as current market conditions persist. And that means, of course, interfering with our choices, since it’s hard to choose an option that’s not on the table. With fewer services available, options have been reduced, and, assuming the real value to patients of some available procedures that would be less prevalent as a result of cost-control measures, the quality of services would be reduced. So Goal 1 doesn’t look too achievable as long as Goal 2 and Goal 3 are also being pursued.

Of course, we could insist that Goal 1 be achieved no matter what, perhaps along with Goal 3. But then it’s hard to see how Goal 2 could be achieved. Or we could dramatically reduce choice, and perhaps, just perhaps, that might enable us to offer an ample supply of, well, some kind of care judged by someone to be of high quality, while controlling costs. Would the quality be adequate? Without choice, it would be hard to tell, and it would be hard to require quality: markets can prompt increases in quality, but we wouldn’t have anything like an unrestrained market.

So it might seem, at first glance, as if there were a real problem achieving all three goals. But there’s not, if you vary one assumption that isn’t being made explicit in most of the discussions being conducted on-line, on TV, and in the print media by Beltway insiders. That’s the assumption that we need to keep a whole range of monopolistic cartels intact, cartels established by the state at least in part precisely to keep costs up.

A natural approach for anarchists to take is to challenge this assumption, while suggesting that, if it's not endorsed, the three explicitly stated goals can all be achieved at the same time. One way to think about this is as a contribution to the ongoing debate about the meaning of “socialism.” The Tuckerite claim (I’m not precisely a Tuckerite, but I like to think of myself as a fellow traveler) is, I take it, that “socialism” is best understood as naming a series of goals which can be achieved using the political means—rooted in the use of force—or the economic means—rooted in voluntary exchange and gift. For the Tuckerite, the economic means turns out to achieve the desired set of goals more efficiently than the political means—and so without the aggression that’s definitionally part of the use of the political means. But what is achieved is still socialism. The Tuckerite socialist can achieve what the state socialist purports to want, but without many of the human and financial costs created by a state-based approach.

What the State Does to Keep Health Care Costs High

Consider the impact of the monopoly power drug companies and medical device exercise by retaining and enforcing patent rights arbitrarily conferred by the government. Or consider the effect on prices when licensing requirements limit who can be a doctor, how many doctors there can be, what kinds of procedures non-doctors can perform? Or the effect exerted by similar licensing requirements that dramatically reduce competition in other health-care professions. Or the effect of limiting the accreditation of hospitals—too frequently in light of the market conditions of the communities in which they wish to operate (so that there’s as little head-to-head competition as possible).

And there’s more: what about the rules that provide tax incentives for employers to purchase health insurance for employees, thus taking responsibility out of the hands of employees with incentives to seek good individual deals? And what about state rules that make it harder, or impossible, for people to seek insurance from out-of-state carriers? Or ones that limit who can be an insurer (hint: not a physician who wants to offer her patients care on a flat-fee-per-year basis)? These constraints create or promote monopolistic or quasi-monopolistic positions for many players in the health-insurance industry.

The FDA approval process is also, of course, a state monopoly that drives up costs and lengthens the time-to-market of many products. It's also one of the factors that helps to make health care unaffordable for many people.

State subsidies to agriculture also contribute to health-care costs by encouraging the purchase of lots of low-nutrition foods. Purchasing these items simultaneously redirects resources that could be used to buy foods that made positive contributions to people's health away from the purchase of such foods and encourages the purchase of items that may actually decrease health and thus boost health care costs.

Finally: it’s not a monopoly, precisely, but it is a dubious legal privilege that also drives up costs. A punitive damage award can turn an individual person into scapegoats, someone to be “taught a lesson” on behalf of the entire class of victims of conduct like his or her own. Punitive damage awards drive up costs unnecessarily while forcing health-care professionals and hospitals to focus on defensive medicine.

How the State Can Help to Make Health Care Accessible by Stopping Its War on Poor People

Remember, the driving force behind so much of the debate about health care is accessibility. That’s a function of cost. But it’s also a function of the incomes of people who might want access to care but can’t afford it.

The first step would be to lower taxes. The long-term goal must be to eliminate all the tribute people pay to the state at all levels, but legislators might start by dramatically increasing the standard deduction while , at the federal level, increasing the Earned Income Tax Credit.

It’s worth asking, too, about the impact of multiple monopolies on the circumstances of poor people. The state does lots of things that make and keep people poor.

Some kinds of jobs require business licenses, or other kinds of permissions from local actors to start up. Maybe the licenses require costly and dispensable equipment or unnecessary certification, or maybe they just involve prohibitive up-front costs. (Think about how much it costs to obtain a New York taxicab medallion.) Sometimes, they preclude people using the low-cost facilities that are their own homes for business purposes, imposing the heavy burden of working elsewhere. And sometimes—as when Tulare, California, officials recently shut down a little girl’s lemonade stand because it didn’t have a license—licensing requirements are just exercises in petty tyranny. Whatever their form or their motivation, the burdens created by licensing requirements fall hardest on poor people.

Those same requirements impact where poor people can find housing: housing that doesn’t meet someone else’s standards of middle-class acceptability is denied to poor people who could pay for it, but might be able to pay for anything else. And the burden on the poor is only increased when certain kinds of jobs are denied to people at all—like selling medications that the government wants sold only by government approved pharmacists in government-approved pharmacies.

Tariffs also hurt poor people by significantly increasing the costs they need to pay for imported goods (including, often enough, food that would be less expensive than domestic alternatives absent import duties). Often touted as propping up poor workers' incomes, they serve primarily to boost the profits of poorly performing domestic producers at the expense of both domestic consumers (especially poor ones) and foreign producers.

In a perfect or near-perfect market, it might make little difference whether or not everyone was unionized. But in today’s un-freed market, state-guaranteed privilege, rather than competitive excellence, is responsible for some corporate profits. In this kind of market, unionization can help to improve workers’ economic positions. State limitations on union activity can tend to reduce unions’ influence, and so to reduce the incomes of workers who might make more were they free to engage in more radical bargaining tactics.

An Initial Anarchist Agenda

Bottom line: arguably the most important thing government officials could do to reduce health care costs would be to get completely out of the way, to stop privileging favored elites and driving up prices. State functionaries could::

Stop offering protection to patents and copyrights.

Eliminate hospital accrediting and professional licensing rules, leaving a variety of flexible, competing market-based certification systems to do the job.

Repeal regulations that prevent the sale of insurance across state lines and that prevent the operation of what amount to insurance schemes by health professionals.

Alter the tax code to de-link employment and insurance. (This change would have the potential to boost net taxes, of course, if it weren't made in tandem with the tax cuts for which I've argued.)

Replace the FDA approval process with alternative, voluntary private certification systems. (Obviously, doing this would include eliminating all attempts to use the force of law to limit the commercial accessibility of remedies desired by health-care conumsers.)

Eliminate agricultural subsidies.

And government officials could also ensure that ordinary people had the resources needed to pay for (newly much less expensive) health care. They could:

Eliminate licensing, zoning, and related restrictions that help to keep people from starting small, low-capital businesses.

Eliminate rules that force poor people to choose between the kind of housing middle-class planners and neighborhood busybodies prefer—and no housing at all.

Eliminate import duties.

Slash the tax burden at the state and federal level as much as possible—sharply increasing the standard income tax deduction and the Earned Income Tax Credit—and make corresponding reductions in spending.

Notice how the Tuckerite socialist model would work. It would ensure that poor people had more money. By eliminating monopolies (and quasi-monopolistic market distortions like tax subsidies for particular insurance choices), it would also ensure that prices for health care services—whether purchased directly or provided via insurers—were lower. By keeping a competitive market in place, it would ensure that competitive market pressures would tend to elevate overall product and service quality. And because it wouldn't involve the installation of yet another czar, or the equivalent, because it would leave people free to make their own health-care choices, it would preserve liberty rather than limiting it. It would achieve all three of the goals proponents of current health-care reform measures say they want.

Putting it on the table could also provide an opportunity to link a variety of other pro-freedom legal changes with (radical) health-care reform. And it would force proponents of statist options to ask more clearly whether they value the goals they say they want to achieve more than they value the opportunity to give more power to technocrats.

While a Tuckerite socialist plan would, indeed, provide a way of achieving state-socialist goals via the economic rather than the political means, such a plan would be anything but a continuation of the status quo. Indeed, it would be a dramatic attack on the status quo, one that redistributed wealth from privileged monopolists to ordinary people, and dramatically increased the likelihood of access to inexpensive, high-quality medical care for all Americans.

"The Tuckerite claim (I’m not a Tuckerite, but I like to think of myself as a fellow traveler) is, I take it, that “socialism” is best understood as naming a series of goals which can be achieved using the political means or the economic means." &

"But such a plan would be anything but a continuation of the status quo. It would be a dramatic attack on the status quo, one that redistributed wealth from privileged monopolists to ordinary people, and dramatically increased the likelihood of access to inexpensive, high-quality medical care for all Americans."

You write, "For the Tuckerite, the economic means turns out to achieve the desired set of goals more efficiently than the political means—and, of course, without the coercion that’s an inescapable part of the use of state power."

Do you mean coercion, or aggression? As explained in my post The Problem with "Coercion," it seems to me that libertarians often inappropriately use "coercion" as a synonym for aggression. But to coerce, or to threaten, is neutral--it can be used justifiably, or illicitly--just as force itself can be.

Stephan, this is a hill I certainly don't want to die on. At least not here. But wouldn't the Tuckerite want to say that any thing a state actor does in her official capacity is backed up by the in-principle illegitimate force of the state? If that's right, then it means that, whether or not there might be legitimate private coercion, all state coercion is illegitimate, rooted in the threat of aggressive force. So the Tuckerite will surely want to say that "the coercion that's an inescapable part of state power" is, indeed, worth objecting to.

Gary, that makes sense--all state coercion is aggression--in fact all state action is coercion, and aggression. It's just a semantical argument. Not sure I'm right. I seem to be one of the few people who sees it this way.

BTW your list of proposals is great. You might also want to add to it: eliminate (or radically streamline) the FDA process for approving medical devices and pharmaceuticals (and prevent it from being used as a patent-like monopoly).And in addition to "Eliminate hospital accrediting and hospital licensing rules," what about licensing of doctors? My main qualm is " 5. Alter the tax code to de-link employment and insurance." This possibly means raising taxes on employers/workers ... though I grant you the distortion introduced by permitting employer-granted perqs pre-tax status has been horrible.

What do you mean by this one I don't get it: "Eliminate rules preventing poor people from choosing between middle-class respectability at home—or no home at all."

Stephan, I wrote much of this last night under the influence of Lunesta. It still needs tweaking.

I agree 100% about the FDA review process and about medical licensing. I had meant to write "professional licensing" rather than " hospital licensing" (not my earlier reference to health-care providers' licensing cartels).

As regards the tax issue: my preference, as an anarchist, is to get rid of all taxes as soon as possible. But while they're around, I'd like them to be as simple, fair, and non-market-distorting as possible. The role of employers' bulk purchase of health-care in driving up costs has been repeatedly emphasized, and I think it's got to be eliminated. But recall that I've offered a package that also included substantial tax cuts.

As regards "Eliminate rules . . .": the point was to say (again, I'd hope it was clearer in light of earlier comments) that building codes, zoning, etc., drive up the cost of housing for poor people by forcing them to choose between accommodations middle-class planners and neighborhood busy-bodies might prefer and no accommodations at all.

In the case of the employer tax deduction for employee medical insurance I grant you its consequences have been horrible. But other than this, I am leery of calls to "simplify" taxes, or make them "fair" or "less distorting". Especially the call for "simplification"--just lower rates. But calls for simplification are used as a bait and switch.

Stephan, I have no burden to defend or shill for anyone’s bait-and-switch tactics.

It just seems to me that it’s a bad idea for the state to try to plan production, distribution, and consumption via the tax code. When it favors some activities over others (a) it’s almost always engaged in unfairly rewarding cronies at the expense of others and (b) it’s distorting otherwise helpful market signals.

As an anrchist, I want to see taxes eliminated. As long as they’re being collected, though, I don’t want the state to use them as part of an attempt to implement plans it’s not capable for formulating rationally. It seems to me that that step 1—hardly radical enough, but a start—would be eliminating the corporate income tax, eliminating personal income tax deductions and credits apart from the standard deduction, dramatically boosting the standard deduction, and replacing the multiplicity of rates with a single one.

Maybe someone else arguing for such an arrangement is engaged in baiting and switching, but I’m not.

Gary: "Stephan, I have no burden to defend or shill for anyone’s bait-and-switch tactics."

I know; I of course didn't mean to imply you did. It's just one reason I am leery of the call for tax simplification etc. (by most people).

"It just seems to me that it’s a bad idea for the state to try to plan production, distribution, and consumption via the tax code."

Agreed; but I am not sure opposing this means favoring simplification.

"When it favors some activities over others (a) it’s almost always engaged in unfairly rewarding cronies at the expense of others and (b) it’s distorting otherwise helpful market signals."

But all taxes favor some activities over others."It seems to me that that step 1—hardly radical enough, but a start—would be eliminating the corporate income tax, eliminating personal income tax deductions and credits apart from the standard deduction, dramatically boosting the standard deduction, and replacing the multiplicity of rates with a single one."

I don't see the advantage in this, honestly. I just think we shoudl call for lowering tax rates, and that's about it.

We have no intention of trying to influence your President, and the people of the USA, either way just by our views alone. But you must understand that the experience of the real state-funded and directed NHS in the UK has been a total disaster.Billions, every year, more and more also, every time, have been expended, for really no justifiable result.

You "can't get the Hog to Slaughter Itself"..." You probably know the phrase first hand....

Chris, I'm not sure I follow. My point was that zoning regulations and building codes often force people to choose between (1) housing they can't afford or (2) homelessness.I therefore urged doing away with zoning regulations and building codes. When did Bill Clinton argue for either?

About Me

I’m Professor of Law and Business Ethics and Associate Dean of the Tom and Vi Zapara School of Business at La Sierra University and a left-wing market anarchist.
I take anarchism to be the project of doing without the state. I'm a leftist because I support inclusion and oppose subordination, deprivation, and aggressive and preventive war. I’m happy to identify as both, in something not unlike the sense suggested by Benjamin Tucker’s work, a socialist and a libertarian.
Recent books: Anarchy and Legal Order (Cambridge 2013); Economic Justice and Natural Law (Cambridge 2009); Radicalizing Rawls (Palgrave 2014); The Conscience of an Anarchist (Cobden 2011); and Markets Not Capitalism (Minor Compositions-Autonomedia 2011) (co-edited with Charles W. Johnson). Next: Libertarian Theories of Class (co-edited with Ross Kenyon and Roderick T. Long) and Social Cooperation and Human Ecology.